Trading Partner Portal: Russia

Overview

Trade Overview

After the December 1991 dissolution of the Soviet Union, the Russian Federation became its successor state, inheriting its prominent place on the world stage. With a GDP of $1.283 trillion in 2017, Russia is one of the world’s top exporters according to the World Trade Organization and CIA Factbook.

The United States exported $6.987 billion to Russia in 2017, with 41.5 percent being transportation equipment and machinery. Russia exported $17 billion to the US in 2017, with 39.2 percent being petroleum and coal products. Primary metal manufacturing contributed 33.2 percent and chemicals made up 9.2 percent while the oil and gas category had 5.7 percent of the total US imports from Russia.

California exported $531 million in goods to Russia in 2017. 25.7 percent was attributed to computer and electronic products, 20.3 percent consisted of non-electrical machinery, transportation equipment made up 17.1 percent, and chemicals were the next highest exports, with 16.5 percent. In the same year California imported $1.82 billion from Russia. Top imports included petroleum and coal products with 53.8 percent, oil and gas that consisted 18.5 percent, primary metal manufacturing made up 10.5 percent, and transportation equipment made up 5.6 percent of imports. (US Department of Commerce)

Foreign Direct Investment

According to the most recent figures, total investment by Russian business in the U.S. market reached $4.3 billion in 2016, while total U.S. direct investment into Russia reached $10.5 billion. Russian FDI in the US supported between 5,000 and 10,000 jobs in 2016. The top industry sectors for Russian FDI are: software and IT services, financial services, metals, coal oil and natural gas, chemicals, and business services. Select USA

The USRBC Applauds Russia’s Formal Invitation to Join the WTO Package US – Russia Business council, December 16, 2011
The WTO is a multilateral treaty subscribed to by over 150 governments that together account for more than 97 percent of world trade. Over 20 governments are currently negotiating or due to negotiate accession to the WTO. Its basic aim is to liberalize world trade and place it on a secure basis, thereby contributing to economic growth and development and to the welfare of the world’s peoples.

The functions of the WTO are:

administering WTO trade agreements;

providing a forum for trade negotiations;

handling trade disputes;

monitoring national trade policies;

offering technical assistance and training for developing countries; and

cooperation with other international organizations.

The Russian Federation made significant steps towards WTO membership in 2006. The United States and the Russian Federation reached a bilateral trade agreement in November 2006, which cleared a major hurdle to their membership. This follows the 2005 completion of bilateral negotiations on goods with 29 total WTO members, accounting for countries that provide 87 percent of all Russian imports.

On October 1, 2010, US Trade Representative, Ambassador Ron Kirk stated “As President Obama has made clear, having Russia in the rules-based system of the WTO is clearly in the United States’ interest, and we will continue to offer our support as Russia completes the accession process. By reaching bilateral agreement on key issues related to the accession process, Russia can now devote additional energy to addressing remaining steps at the multilateral level. The United States will continue to provide support to Russia as it accomplishes these steps, and to contribute to continued momentum in the process, in cooperation with other members of the WTO.”

As Russia joins the WTO, the United States looks forward to further enhancing bilateral trade relations with Russia.

From the US Chamber: On October 20,2011 – nineteen business organizations representing the technology industry and the broader business community, including the Chamber, sent a letter to President Obama to underscore the importance of Russia joining the Information Technology Agreement (ITA) as part of its World Trade Organization (WTO) accession package.

The letter states: “We believe it is crucial for Russia to maintain its 2006 commitment to join the ITA as part of its accession package. While we are confident the Office of the U.S. Trade Representative is fully engaged in attempting to bring about this outcome, we believe it is important to directly communicate to you how essential it is to our industry that Russia become an ITA signatory and to underscore with you that the U.S. technology industry’s support of Russia’s accession to the WTO is predicated in large part upon it joining the ITA.”

Ulyanovsk and Chelyabinsk

Ulyanovsk and Chelyabinsk are two fast-developing regions of Russia. Both regions are taking steps in different fields of the economy, including manufacturing, metallurgy, natural resources extraction, engineering, construction, energy, agriculture, banking, and others to successfully collaborate with foreign investors.

The regions have a solid investment profile that have tripled for the last five years and reached more than $4 billion.

Krasnodar, Samara and Primorsky Krai

Krasnodar is regarded as one of the six regions in Russia with the highest investment potential. “The region ranks first in the country in terms of agricultural production, second in housing commissioning, third in investments attracted, fourth in terms of construction completed and public paid services, fifth in terms of retail sales and sixth in public catering turnover.” Guide to Investment, Krasnodar Region, 2011

Samara is a prominent region in Russia, widely regarded as the place for bio-innovation. Its key industries include machine engineering and metal processing, chemicals and petrochemicals, food and beverages, energy, non-ferrous metals and agriculture.

Primorsky Krai is the largest economy in the Far East of Russia. Its key industries include food production, machine building, defense, construction and timber. In 2012, the region attracted USD 700 billion in foreign investments, primarily from the People’s Republic of China, the Republic of Korea, Japan and the US.

Fort Ross: The Russia – California Connection

Located approximately 2 1/2 hours above San Francisco, on California’s northern coast line, sits State Historical Park Fort Ross. According to it’s website, “Fort Ross was a thriving Russian-American Company settlement from 1812 to 1841. This commercial company chartered by Russia’s tsarist government controlled all Russian exploration, trade and settlement in the North Pacific, and established permanent settlements in Alaska and California.”

In June 2010, Governor Arnold Schwarzenegger signed a memorandum of understanding (MOU) with the Renova Group of Companies in order to affirm a partnership to support and promote the preservation of California’s Fort Ross State Historic Park, and to raise awareness of its historical and cultural significance.

Events

Events

On September 26, 2012, Roman Zykunov, Trade Representative for the Russian Federation, visited the CalChamber offices to discuss current trade relations between California and Russia.

As well as discussing the on-going support from the CalChamber for Russia’s PNTR status, Mr. Zykunov reviewed several measures, recently taken by the Russian government, to improve investment project conditions in their country. This list included facilitating construction procedures, lifting infrastructure restrictions, simplifying procedures for hiring highly qualified expatriates, and improving customs administration.

On November 2, 2010, Mr. Maxim Bezaev visited the CalChamber to discuss California – Russia Trade Relations. Mr. Bazaev is the Head of Projects and Programmes Division, within the Department of International, Foreign Economic and Interregional Relations of the Nizhny Novgorod Region of Russia.

The Nizhny Novgorod Region is located in the European center of Russia, approximately 400 km northwest of Moscow. Chief exports of this region are transporation equipment, metallurgy, chemical and petrochemical production and lumber. Nizhny Novgorod also has over 300 high-technology companies and with approximately 43 million people, it is a key Russian consumption market.

Governor Schwarzenegger Leads Trade Mission to Russia -2010

Governor Schwarzenegger speaking to the American Chamber of Commerce in Russia (Photo Courtesy of the Governor’s Office)

In October, 2010 Governor Arnold Schwarzenegger led a trade mission to promote California’s leadership in the high-technology industry and strengthen relations with California’s international partners with stops in Russia and London.

In June, the Governor met with Russian Federation President Dmitry Medvedev in Silicon Valley where they discussed Russia’s efforts to generate a technology center similar to Silicon Valley in Skolkovo. The Governor is honoring President Medvedev’s invitation to come to Russia, where he will connect a number of Silicon Valley business leaders and venture capitalists with Russian leaders and business people.